Matrix Structures: how to make them work?

Matrix structures have redefined organizations and, as a result, the way in which teams interact with each other has become extremely complex. However, matrices are here to stay. Understanding four key levers can help us put them at the service of the objectives of the organization.

“We’ll put the matrix upside-down” announced the new CEO, shortly after taking over a subsidiary of a global company. “From now on, district managers will report to functional managers. Business units will be divided into territories, but will have an intermediate regional level. Support areas will be decentralized, and there will be a series of projects that will report to a mixed structure where each member will have a double role”.

Nowadays, organizations face challenging contexts. Managers have to face growing complexity levels, with a higher diversity of operations and frequent changes. At the same time, their parent companies push them to reduce costs, homogenize standards and achieve global synergies.

In the last few years, the need for quick decisions to meet local demands without losing the global identity has led to a spread of matrix structures. This kind of organization allows each professional to specialize in a single aspect of the business, and then work in coordination with experts from other areas. This approach would lead the company to create outstanding teams in the different facets of business.

However, the truth is that matrices rarely work the way they should. Thus, we often see CEOs announcing their intention to put “the matrix upside down”. This means a series of restructurings, but the results never come. In the meantime, employees have to face the uncertainty about who shall define their priorities, and managers engage in internal political struggles for the resources.

After years of experience with matrix structures, we have learnt some lessons. The main one is that badly-managed matrices tend to dramatically dilute the responsibility and commitment of those who live under them. This results in endless meetings, workflows overloaded with approval stages, and e-mails with “just-in-case copies” to a myriad of actors that have nothing to do with the matter.

In this way, conflicts and the multiplication of bureaucratic processes lead to a loss of agility. This is precisely the reason why the matrix was implemented initially.

Four principles for an effective matrix

Many of the problems are caused by implementation errors. In many cases, a matrix structure conceals the traditional structures of power. The matrix is merely a modern disguise of the traditional hierarchical relationships.

For the matrix to work, moving the “little boxes” in the organizational chart is not enough. What we need to do is to get the “little boxes” to cooperate among themselves, so that decisions flow and the commitment to decisions results in prompt action. Let us see now, the four piers that a leader that navigates an organizational matrix should maintain in order to achieve the desired effectiveness.

Structure. First, we must make sure we are using a true matrix structure, instead of an intermediate form of structure that gets stuck in the middle. There are plenty of examples: temporary double hat, dotted lines, single-project matrices, among many others. Intermediate versions create confusion and, often conceal traditional structures.

A true matrix structure implies complete double reporting. Each employee must have two bosses that coordinate everything among themselves, even evaluations. We must try to define clearly the functional and hierarchical reporting lines, the points of intersection of these lines and double reporting mechanisms that will create a balanced and efficient matrix.

Decision-making roles. Once the structure is proposed, it is necessary to define clear decision-making roles. Even though these are necessary in all structures, the matrix does allow for mistakes here. The process will get stuck at the slightest ambiguity of roles, and nobody will make any decision.

The purpose of the matrix design is that decisions are made in the right way, by the right people and at the right moment. The decision-making management and the optimal levels of delegation and scalability must be set up by means of a map of roles.

Information flows. Information processes in matrix structures tend to be more complex than in traditional lineal structures. In this kind of structures, where more actors have to interact for each decision, and where expert information is spread over the hidden boxes of a matrix, it is even more important that information gets to the right places, with the suitable quality and within the time specified.

On the other hand, due to the great division of roles in these structures, we tend to see meetings with thousands of participants. For greater effectiveness, it is essential that information be shared beforehand. Only in this way, will every actor be able to get ready adequately, to validate the information with his boss and ensure commitment to what is agreed in the meeting.

Cultural motivators. Once the matrix is designed, the roles are clear and the processes are defined, we must make sure that the people included in it are motivated to work effectively and have the necessary training to deal with the obstacles that may come up along the way.

At this stage, we must define the mechanisms to communicate priorities, the way to solve conflicts, the adjustment to the evaluation of matrix performance and the alignment of the prize and punishment system. In an effective matrix, a regional manager, for instance, could add crossed objectives from a business unit manager beyond his region, where it may seem he can do nothing to encourage cooperation among them.

Finally, this is not about arguing for or against matrix structures. Products adapted to the local taste under the umbrella of a global brand and cost reduction with standardized processes, together with respect for local idiosyncrasies, are some of the reasons why organizations tend to implement this kind of structures.

In a complex business environment, the matrix is here to stay. The key lies in making sure it is balanced so that the power, information or motivations of the participants do not conceal behaviors that go against its efficiency. A balanced matrix must flow to make sure the organization takes into account global efficiencies and integrations, while adapting to local peculiarities in an agile way. And all this, without dying in the process.

Gastón Francese
Partner at Tandem.

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